How much do you spend in retirement ?

Stubod

As per the above comments, I think it is important to know what your current costs. You may lose some of these once retired, and equally you will gain some.

The starting point for me was a basic spreadsheet listing your key items of expenditure. You can then factor in what you will lose once retired, (eg commuting costs), and add in what else you think you will want (eg more holidays?). Then add in what your income/pensions/interest is likely to be (and whether they are index linked). You will then have a good idea whether you are on the right track or need to "save" more or spend less!

Prism

Its different for everybody and will likely reflect your income you are used to. We are aiming as a couple for around 80k as except for the mortgage dropping off I can't see us spending much less. Kids will still need support, hopefully some great holidays.

Anonymous101

Sea_Shell said:

The trick is knowing "exactly" what you're spending and on what, now.

Then deciding if you'd be happy with your current lifestyle in retirement, or if you want to be more extravagant?

Once you have "a number" you can set about trying to achieve it.

But then no good asking me, as our number is £15k...and I've still got most of it left!!  

I couldn't agree with this more. Understanding what you are spending on now is the most straightforward thing to do first. This gives you a baseline against which you can forecast future spending.
If you understand each cost item which you are incurring now then its relatively straightforward to estimate what your spending might be in retirement, at today's prices of course.

This is great for planning purposes, if then like Sea_Shell you continue to monitor your spending into retirement small adjustments might be required in a kind of continual feedback loop. Adjusted spending leads to adjustments to budgets etc.
SS you've just not readjusted your budget based on your current spending that's all. 

badger09

In case anyone is interested, this is the Which? article to which OP referred.
https://www.which.co.uk/money/pensions-and-retirement/starting-to-plan-your-retirement/how-much-will-you-need-to-retire-atu0z9k0lw3p

Amateurretiree

I like to keep it simple. Work out essential outgoings( gas, electric, council tax, groceries etc) . Then add on your ‘ must have ‘ luxuries ( we spend about 15000 a year on holidays to the USA, we treat every trip as if it our last as you never know when it is!).

We keep a bit for any house improvements we have planned, a bit for day to day spending as in normal times it’s nice to go for a nice walk and a pub lunch when the mood takes you.
We also like to treat our granddaughter to anything her heart desires, when her parents allow it! And we are saving for her university fees, but she’s only two so plenty of time!

We can cut back on all but the essentials if we ever needed to but hopefully we won’t have to.
Its quite easy really for us.
Essentials =£12000

Everything else probably £20000. We expect this to reduce as we get older, we are both retired, I’m 58 DH is 62. We love being retired, and it was all working out great until we had to stop seeing our family 10 weeks ago. 

In the future we won’t take anything for granted, probably no holidays for a year or two.
I think the important thing is to have your essentials covered, make sure the other one is ok financially if one of you dies, and work out what you have left to enjoy your retirement!

ratechaser

badger09 said:

In case anyone is interested, this is the Which? article to which OP referred.
https://www.which.co.uk/money/pensions-and-retirement/starting-to-plan-your-retirement/how-much-will-you-need-to-retire-atu0z9k0lw3p

Very interested so thank you.

Alright so I can see where the holes are for me in terms of the 'luxurious' budget - LH travel doesn't come close (said it before and will say it again, I'm not spending my dotage in economy!).

£800 for 'expensive meals' is not going to go far, perhaps it's just a question of what's expensive, but Mrs RC and I would normally run to £100+ on a typical Saturday night out, and not even in a particularly fancy place. Maybe that's living in the Home Counties for you.

Allowing only £4000 per year for a car, including depreciation, is pretty low as well. 

Could go on but it's, as before, just a question of perspective. I think £80-100k gross between us will be more than sufficient, but not gone any further than fag packet estimates yet...

jonnygee2

I have a really simple approach - I live comfortably on a certain amount now (not including things like mortgage which I won't pay in retirement) - it's about £1500 a month. I just intend to keep that amount going in retirement.

There would then be some expenses I don't pay (e.g. TFL fares!) but that would leave a little extra for travel etc. 

pjread

I'm about 20 years away from it so my opinion might be very wrong, but largely echoing what other have said...

Current expenses - (work expenses like travel + mortgage cost) + a bit of 'fun money' for an extra holiday and other bits a year.  

If you're planning on using drawdown, make sure there's a decent buffer.  If the number looks unattainable, now is the time to start cutting those expenses rather than at retirement(!)

Personally I'm assuming zero state pension too - fingers crossed that won't be the case, but I'd rather be paranoid now than cold and hungry at 80!

MallyGirl

ratechaser said:

badger09 said:

In case anyone is interested, this is the Which? article to which OP referred.
https://www.which.co.uk/money/pensions-and-retirement/starting-to-plan-your-retirement/how-much-will-you-need-to-retire-atu0z9k0lw3p

Very interested so thank you.

Alright so I can see where the holes are for me in terms of the 'luxurious' budget - LH travel doesn't come close (said it before and will say it again, I'm not spending my dotage in economy!).

£800 for 'expensive meals' is not going to go far, perhaps it's just a question of what's expensive, but Mrs RC and I would normally run to £100+ on a typical Saturday night out, and not even in a particularly fancy place. Maybe that's living in the Home Counties for you.

Allowing only £4000 per year for a car, including depreciation, is pretty low as well. 

Could go on but it's, as before, just a question of perspective. I think £80-100k gross between us will be more than sufficient, but not gone any further than fag packet estimates yet...

We are in your ballpark and have similar ideas about LH travel.
I have a row in the spreadsheet for 'fixed & variable costs' and are then looking for another £40k on top till we hit 80 then dropping a bit maybe (unless we need more help/care by then). That will be for bigger entertainment, travel, helping DD if she needs it, toys/hobbies, car replacement,... If we don't spend it then that is fine - its a budget not a target. DH will not entertain the idea of early retirement if it means not being able to afford to do what he wants to - he'd rather work for longer. I am not going to change him at this point.
Fixed - TV licence, BB & landline, contact lenses, council tax, health insurance. Even just that comes to £6k (South East based and not looking to move).
Variable - fuel & water bills, phones, insurance (house, cars, pet, vet plan), car taxes, fuel, car maint/MOT, house maintenance, food, 'local' entertainment. Things that will happen but we could tighten the belt on. Another £23k

zagfles

Re travel, one thing to bear in mind is that travel should become much cheaper when you're retired for a number of reasons.

You will be able to book last minute cheapies, you can travel at cheaper off peak times. If you're on holiday a lot more you will unlikely be spending what you usually do on holidays, because you simply can't live for 3+ months of the year the same as the typical fortnight AI, you'll end up putting on 10 stone and getting cirrosis! Also if you like active holidays, you will likely have more time so can spread activities out over longer, and will probably need to.

For long haul a lot of destinations are cheap eg SE Asia, so if you stay a long time you might end up spending less than you would in the UK! I know people who this applies to, one rents her house out and that pays all her holiday expenses. You will also be time rich so can take your time getting places. For instance if I want a good night's sleep on my way to Australia, I'll book the transit hotel in Singapore with an 8-10 hour connection time rather than pay ridiculous business class prices for a "dorm bed".

I tried this out last year, I took some unpaid leave and in the 12 month before the lockdown I went on 6 foreign holidays, 13 countries, 3 continents, spent around £8k total, mostly just me and wife but two of them partly with the kids and one solo one.

BUT - who knows what will happen with travel when the current crisis is over, it could end up being much more expensive!!